Does Chart Industries, Inc. (NASDAQ:GTLS) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Chart Industries, Inc. (NASDAQ:GTLS) shareholders have witnessed an increase in support from the world's most elite money managers recently. Our calculations also showed that GTLS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the recent hedge fund action regarding Chart Industries, Inc. (NASDAQ:GTLS).
How are hedge funds trading Chart Industries, Inc. (NASDAQ:GTLS)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GTLS over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Chart Industries, Inc. (NASDAQ:GTLS), with a stake worth $94.9 million reported as of the end of March. Trailing Citadel Investment Group was Fisher Asset Management, which amassed a stake valued at $76.8 million. Millennium Management, Columbus Circle Investors, and Alyeska Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Chart Industries, Inc. (NASDAQ:GTLS). Balyasny Asset Management had $10.3 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also made a $5.7 million investment in the stock during the quarter. The other funds with new positions in the stock are William Harnisch's Peconic Partners LLC, Paul Tudor Jones's Tudor Investment Corp, and Mark Broach's Manatuck Hill Partners.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Chart Industries, Inc. (NASDAQ:GTLS) but similarly valued. These stocks are ABM Industries Incorporated (NYSE:ABM), Sunoco LP (NYSE:SUN), Columbia Banking System Inc (NASDAQ:COLB), and Herman Miller, Inc. (NASDAQ:MLHR). This group of stocks' market values match GTLS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABM,10,38801,2 SUN,6,15222,-1 COLB,7,112689,-1 MLHR,25,154116,2 Average,12,80207,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $416 million in GTLS's case. Herman Miller, Inc. (NASDAQ:MLHR) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 6 bullish hedge fund positions. Chart Industries, Inc. (NASDAQ:GTLS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GTLS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GTLS were disappointed as the stock returned -18.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.